EUR/USD falls again as greenback consolidates gains
We assess the price action for EUR/USD in the wake of some bullish momentum for the US dollar to start the week. Having been rejected at multi-week highs above $1.10, traders have sent the euro back below $1.09.
EUR/USD posts second straight decline to start the week
EUR/USD continued its decline from one-month highs above $1.10 last Friday, amid a renewed round of US dollar strength to start the week
In early morning UK trade, the euro had fallen back below $1.09 after struggling to hold its ground above that level during the Asian session on Tuesday.
The price action was reflective of continued strength in the USD, which was initially sparked by a bout of risk-off sentiment on Monday following hawkish anti-China comments from US President Donald Trump's administration over the weekend.
With US-China tensions adding to the challenging economic outlook stemming from the Covid-19 pandemic, it’s been a rough start to the week for risk assets.
Currency traders brushed off another poor round of US economic data, as factory orders slumped by a record 10.3% in March, against expectations of a 9.7% fall.
The US dollar index traded near recent highs above 99.50 on Tuesday, with no major catalysts to spark a material move in any of the major trading pairs.
EUR/USD looking for support after rejection at $1.10
European data was also soft on Monday, as manufacturing PMIs for the eurozone fell to just 33.5 while the EU Sentix Investor Confidence index slumped to a reading of -41.8.
Looking at the day ahead, the EU Commission is scheduled to release its latest set of growth forecasts on Tuesday.
Key data out of the US will be led by the March trade balance and the ISM measure of activity levels in non-manufacturing sectors for April.
Despite the broader risk-off appetite, US stocks edged higher on Monday and futures markets for the FTSE, EuroSTOXX600 and the S&P 500 indices are all indicating further gains ahead on Tuesday.
Having failed to break above $1.10, EUR/USD remains under downside pressure as traders test support levels below $1.09.
From a technical standpoint, further declines are expected if the euro fails to hold above $1.088.
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